The Truth About Buying Houses During Elections
It’s election season again, and it’s a good time to ask …
Should you be scared of buying property during elections?
A lot of people are scared by elections.
But you shouldn’t be.
Let’s unpack the truth about investing during elections.
Should I Sit On The Sidelines During An Election Campaign?
There’s no real evidence to say it’s not a good time to buy.
In fact, economic uncertainty reduces home sales.
And any drop in home sales means a greater chance of snagging a bargain.
Typically the real estate market slows down slightly as an election draws near.
And then slowly picks up once the votes have been counted and Canberra goes back to normal (or at least, as normal as it gets).
Could A Change In Government Mean An About-Turn In The Real Estate Market?
In our experience, a change in government doesn’t mean a change in the real estate market.
The notion that house prices go up more under a coalition government isn’t really true.
In fact, over the past few election cycles, there’s been almost no difference house price growth between the ALP or coalition.
The coalition have a slight edge, but that’s mostly from the Covid boom when interest rates fell to almost zero.
And why does the political environment have so little impact on house prices?
It’s because the fundamentals driving the market haven’t really changed much at all.
People are still migrating to Australia.
We’re not building enough houses.
It’s still easy to borrow money. Well, relatively easy.
And interest rates keep going up and down.
These main factors never change, so the market keeps doing what it does regardless of who’s in government.
Could Government Policy Drastically Alter The Market?
In theory, yes.
But we haven’t had major policy changes coming from either side of politics.
The last one was in 1985, 40 years ago when the Hawke Government briefly abolished negative gearing.
And even then, rents and house prices weren’t significantly impacted.
The last serious shot at wholesale changes was in 2016 and again in 2019 when Bill Shorten tried to cut negative gearing back again, as well as limiting capital gains tax.
But they lost those elections.
Both of them.
And after those loss it’s unlikely anyone will ever mess with house prices again.
The only changes will be tinkering around the edges to look good, but nothing to affect house prices.
What Are The Major Property Policies Likely To Be This Time Around?
We’re still waiting for policy announcements.
In fact, as of writing this we’re still waiting for the election to be called.
But frankly we’re not worried.
We’re not seeing much coming from either party.
The ALP will expand it’s co-ownership scheme.
The coalition will let first home buyers dip into their super as a deposit.
First home ownership and building grants are likely to remain untouched.
And of course, both parties have promised to curb immigration and build more houses.
In other words, lots of talk for very little action.
And certainly nothing to worry about.
Should You Hold Off Until After The Election To Invest?
If the past teaches us anything, it’s that there’s no need to sit on the fence during elections.
In fact, with house sales dropping slightly during elections it can be a good time to snag a bargain.
And house prices aren’t going to be affected at all by whichever party wins.
Politicians might promise you the world.
They’ll claim to have your best interests at heart.
But if you’ve been around the block a few times, you’d know it’s nonsense.
And the best person to look after you is … you!
Don’t rely on them.
Get busy, build wealth and set yourself up for a prosperous future.
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